Growing up in Central Florida, I quickly learned that there is oftentimes a public price for almost any attraction and then there was a qualified price. This could be a “Florida Resident Rate” or a “Locals” rate, which almost always existed, even at Disney Parks during the offseason. These qualified discounts or rates were designed to build volume during slow periods.
Hotels also use this strategy. Hotels not attached to casinos use qualified rates or group business to augment demand when needed. For example, AAA rates or “Staycation Packages” for locals are all used to attract customers during low-demand periods.
One of the coolest things about casino yield is the ability to simultaneously process several rates based on elaborate data sets on our loyal customers. It is a really robust version of the simplified qualified rates that other leisure properties deploy. One of the best tactics for achieving a solid return on this strategy is to have a private rate that can be yielded differently from the public rate when needed.
A cash floor rate protects brands so that public rates don’t drop so low that people wonder what is wrong with a property. If left alone to market forces the rate would go low on slow dates, and in some cases obscenely low. However, sometimes you need a few (or more) customers lower than that floor to get the best RevPAR on a night AND you don’t want to sink all the rates to take in these few. The private rate is one way to make that happen.
Private rates are opaque or hidden from the general rates the public sees. On the pure leisure side, this can be through opaque sites such as Hotwire.com or hidden as a group that gets a value-added or deeply discounted group rate. In the casino, it almost always involves allowing players whose worth is below the hurdle rate to get into the property using a casino offer.
It is important to detach public and private rates to allow flexibility in filling rooms on challenging dates. HouseCount does precisely this, by maintaining and managing separate public and private rates. This separation allows for the automatic “disconnecting” of opaque rates to drive volume without compromising public BAR rates.
Maintaining distinct rates ensures that public rates remain attractive and protect the brand image, while private rates can be adjusted to drive volume. This also contributes to some guests feeling like they’ve scored an amazing deal, which certainly helps foster loyalty.
This pricing strategy is particularly effective in the hospitality industry, simply because demand can fluctuate significantly but capacity is static. The power of this strategy is amplified when it is autonomous and can be set up to happen as needed in any given marketplace.
At its core yield is about capturing the most money from each customer we can for each room we have to sell. Ultimately, the public rate being higher is important for this reason in addition to the brand. Some guests (even on slow nights) don’t mind paying your retail prices. Possibly they are expensing the room for business, perhaps they love your property and will just pay for it.
If we just allowed the rate to drop without detaching a private and public rate these less price-sensitive guests would just end up paying less and we wouldn’t be maximizing revenue.
In conclusion, maintaining separate public and private rates is essential for maximizing revenue and protecting brand integrity. By detaching these rates, businesses can attract a diverse range of customers, from those seeking the best deals to those willing to pay full price.
This approach fills rooms during slow periods and ensures that public rates remain attractive and competitive. The flexibility to adjust private rates without impacting public perception allows for optimal revenue management and enhances customer loyalty. Ultimately, this dual-rate strategy is a powerful tool for achieving the best possible financial outcomes in the hospitality industry.
For more insights on maximizing revenue and managing rates connect with us at www.LuxePricing.com.